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The Age of Monopoly-Finance Capital

This article was written for presentation in a panel on Capitalism in Crisis at the Workshop on Marxist Theory and Practice in the World Today, Ho Chi Minh Academy of Politics and Public Administration, Hanoi, Vietnam, December 15, 2009.

Three years ago, in December 2006, I wrote an article for Monthly Review entitled “Monopoly-Finance Capital.” The occasion was the anniversary of Paul Baran and Paul Sweezy’s Monopoly Capital, published four decades earlier in 1966. “The most important question to address on the fortieth anniversary of Baran and Sweezy’s book,” I wrote, is:

Has capitalism changed, evolving still further within or even beyond the monopoly stage as they described it? There is of course no easy answer to this question. As in the case of all major historical developments what is most evident in retrospect is the contradictory nature of the changes that have taken place since the mid-1960s. On the one hand, it is clear that the system has not yet found a way to move forward with respect to its driving force: the process of capital accumulation. The stagnation impasse described in Monopoly Capital has worsened: the underlying disease has spread and deepened while new corrosive symptoms have come into being. On the other hand, the system has found new ways of reproducing itself, and capital has paradoxically even prospered within this impasse, through the explosive growth of finance….I will provisionally call this new hybrid phase of the system “monopoly-finance capital.”

The article went on to discuss “the dual reality” of stagnant growth (or stagnation) and financialization, characterizing the advanced economies in this phase of capitalism. I concluded that this pointed to two possibilities: (1) a major financial and economic crisis in the form of “global debt meltdown and debt-deflation,” and (2) a prolongation of the symbiotic stagnation-financialization relationship of monopoly-finance capital.1 In fact, what we have experienced in the last two years, I would argue, is each of these sequentially: the worst financial-economic crisis since the 1930s, and then the system endeavoring to right itself by returning to financialization as its normal means of countering stagnation.2 It is thus doubly clear today that we are in a new phase of capitalism. In what follows, I shall attempt to outline the logic of this argument, as it evolved out of the work of Baran, Sweezy, and Harry Magdoff in particular, and how it relates to our present economic and social predicament.

The Monopoly Stage

In Monopoly Capital, Baran and Sweezy described advanced capitalism, exemplified by the United States, as an economic and social order dominated by giant, monopolistic (or oligopolistic) corporations—the product of the concentration and centralization of production described by Marx in Capital. The central trait of the system was a tendency for surplus (value) to rise—a phenomenon made possible by the effective banning of genuine price competition in mature, monopolistic industries, together with continually rising productivity. Under these conditions, the main economic constraint was no longer the generation of surplus, but rather its absorption, i.e., a chronic lack of effective demand.3

In the usual analysis of capitalist spending, surplus can be absorbed in two ways: (1) capitalist consumption, and (2) investment. Capitalist consumption runs up against the inner dynamic of capital itself (“Accumulate! Accumulate! That is Moses and the Prophets!”), while corporations normally refrain from carrying out net investment if expected profits on new investment are weak. Such expectations are affected by the existing level of capacity utilization in industry; the presence of idle plant and equipment deters business from investing in still more capacity. Since a rising surplus tendency, moreover, generally means that real wages are rising less than productivity (i.e., workers are more exploited), wage-based consumption is chronically weak relative to society’s capacity to produce, resulting in increasing excess capacity, and the atrophy of net investment. Under monopoly capital the long-term growth trend is therefore sluggish, characterized by a wide, and even widening, underemployment gap. The economy, in other words, falls far short of its potential growth rate, with underutilization of labor and capital goods. Hence, the normal state of the monopoly capitalist economy, Baran and Sweezy argued, was stagnation or an underlying trend of slow growth.

Economic stagnation, in this sense, should not be confused with technological or consumer-product stagnation. Indeed, the constant development of the technology of production that characterizes capitalism in general (including its monopoly stage) only increases the productive potential of the system, intensifying its overaccumulation tendencies. The system could conceivably be rescued from its economic doldrums under these circumstances by the appearance of an epoch-making innovation on the scale of the steam engine, the railroad, and the automobile, in terms of total economic-geographical effects—generating a vast demand for new investment, independent of existing income constraints. Yet no such epoch-making innovation, Baran and Sweezy argued, was on the horizon.

It was true that monopoly capital had proven extremely innovative in generating mountains of new consumer products—the result, in numerous cases, not of the satisfaction of genuine needs but of the artificial manufacture of wants. But, despite its fabled “creative destruction” and the proliferation of waste, the system was unable to overcome a chronic tendency to market saturation.4

Monopoly Capital was published at the end point of the post-Second World War economic “golden age”—a period seemingly far removed from stagnation. This was a time when mainstream economists (not for the last time) were proclaiming the end of the business cycle. But the prosperity of the system in the mid-1960s, Baran and Sweezy insisted, was attributable to a number of special stimuli outside the normal economic process that acted as countervailing factors to stagnation. Some of these were temporary, others more or less permanent. Of the more or less permanent factors, they pointed to a massive sales effort, which had penetrated the production process itself, together with the growth of FIRE (finance, insurance, and real estate). Militarism and imperialism, in the form of the Cold War and the wars in Korea and Vietnam, had also boosted the monopoly capitalist economy by soaking up unused productive capacity. In contrast, civilian government spending, as a share of GDP in the United States, they argued, had already reached its “outer limits” in the late 1930s, thereby limiting its stimulative role. (This has remained true up to the present day, with civilian government consumption and investment as a percentage of GDP over the last four decades staying at approximately the same level as in the late 1930s.)5 The overall analysis pointed to a system in which various countervailing factors were insufficient in the long run to keep it from sinking back into stagnation.

Stagnation and the Financial Explosion

Capitalism fell into a severe crisis in the early to mid-1970s. But rather than a straightforward phenomenon of stagnation, what emerged was stagflation (i.e., a sluggish economy plus inflation). The dominant interpretation was that inflation was the real culprit, and hence the main strategy became one of economic restructuring in its various rubrics: monetarism, supply-side economics, neoliberalism. The Age of Hayek replaced the Age of Keynes. Federal Reserve Board Chairman Paul Volcker’s interest rate shock in the late 1970s, which ushered in the third world debt crisis, was part of this whole repressive shift. In the United States, a new wave of military spending and imperial interventionism was coupled with efforts to curtail the income of the working class, redistributing income and wealth from the poor to the rich. Internationally, this took the form of global restructuring with third world debt as its leverage, ushering in a period of neoliberal globalization.

Sweezy and Magdoff (who joined the former as coeditor of Monthly Review in 1969) continued to argue throughout this period that stagnation constituted the underlying tendency of the monopoly capitalist economy and that the growing weaknesses in production or the real economy were papered over by the massive increase of finance. In the 1970s and 1980s, they published The End of Prosperity (1977), Stagnation and the Financial Explosion (1987), and other works, focusing on the constant expansion of the financial superstructure of the capitalist economy on top of a productive base that increasingly showed signs of structural weakness. “Among the forces countering the tendency to stagnation,” they observed in the latter work, “none has been more important or less understood by economic analysts than the growth, beginning in the 1960s and rapidly gaining momentum after the severe recession of the mid-1970s, of the country’s debt structure (government, corporate, and individual) at a pace far exceeding the sluggish expansion of the underlying ‘real’ economy. The result has been the emergence of an unprecedentedly huge and fragile financial superstructure subject to stresses and strains that increasingly threaten the stability of the economy as a whole.”6

The trends in the speculative growth of the credit-debt system identified by Magdoff and Sweezy only accelerated over the succeeding decades. Total private debt in the U.S. economy rose from 110 percent of GDP in 1970 to 293 percent of in 2007. (Aggregate debt, including government debt held by the public, rose from 150 percent of GDP in 1970 to 346 percent in 2007.) Financial instability was increasingly evident in recurrent credit crunches. The growth of debt, Monthly Review argued, was like a drug addiction, in the sense that more and more of the drug was necessary to get the same stimulating effect, along with the slow deterioration of the morphological condition of the subject. In the 1970s, the increase in U.S. GDP was about sixty cents for every new dollar of debt. By the early 2000s, this had declined to about 20 cents for every new dollar of debt.

During the last forty years (1970-2010), the U.S. economy, and the world economy as a whole—despite rapid growth in parts of Asia—has experienced a secular slowdown. The rate of growth (adjusted for inflation) of the U.S. economy has slowly subsided, decade by decade: it was lower in the 1970s than in the 1960s; lower in the 1980s and ‘90s than in the 1970s; and lower in 2000-09 than in the 1980s and ‘90s. Net non-residential investment declined from 4.8 percent of GDP in 1965-1966 to 2.6 percent in 2005-2006. Real hourly wages of nonagricultural workers peaked in 1972, and, by 2006, had fallen back to their 1967 level. While wage and salary disbursements as a percentage of GDP dropped from 53 percent in 1970 to 46 percent in 2006. The same general tendency to stagnation affected Europe and Japan as well.7

Financialization

By the late 1980s (following the 1987 stock market crash) and continuing into the late 1990s, Sweezy was wrestling with the notion of financialization as a more or less permanent tendency of advanced monopoly capitalism—the other side of the stagnationist coin. In 1997 he wrote: “the three most important underlying trends in the recent history of capitalism, the period beginning with the recession of 1974-75 [are]: (1) the slowing down of the overall rate of growth; (2) the worldwide proliferation of monopolistic (or oligopolistic) multinational corporations; and (3) what may be called the financialization of the capital accumulation process.” (Globalization, a fourth trend, he argued, was a much longer, more complex, variegated phenomenon, reflecting the growth of imperialism, and going back to the very beginnings of the capitalist world economy.)8

Financialization can be defined as the shift in the center of gravity of the capitalist economy, from production to finance. Financial crisis and instability, Sweezy observed, had always been an element at the peak of the business cycle. But how did one explain the expansion of financialization as a long-term trend? Was it possible that financial speculation now managed to feed not on rapid growth, but on slow growth—inverting past historical experience? It was obvious that corporations and wealthy investors that had surplus at their disposal sought to preserve and expand their money capital in the face of vanishing investment opportunities by pouring it into speculation in a variety of assets. Financial institutions, it was no less apparent, were able to provide a seemingly infinite supply of exotic and opaque financial instruments: all sorts of futures, options, and derivatives. But the continuation of such a “casino economy” over decades—albeit interrupted by credit crunches, with the central banks intervening as lenders of last resort to keep the whole game going—represented nothing less than a qualitative transformation in the capitalist economy.

As Sweezy posed the problem in a twenty-five year retrospective on Monopoly Capital: “In the established tradition of both mainstream and Marxian economies, we [had] treated capital accumulation as being essentially a matter of adding to the stock of existing capital goods. But, in reality, this is only one aspect of the process. Accumulation is also a matter of adding to the stock of financial assets. The two aspects are, of course, interrelated, but the nature of this interrelation is problematic to say the least.”9 Still, a number of aspects of this interrelation were increasingly evident:

Financialization could help lift a stagnant economy, through the employment created in the FIRE sector and all sorts of wealth effects that translated increased asset prices into new demand.

Financialization was unable to alter the underlying problem of stagnation within production, and, in some ways, even aggravated it.

Growth of finance relative to the real economy also meant the appearance of financial bubbles that threatened to burst.

The monopoly capitalist economy was increasingly dependent on the central banks as lenders of last resort to provide liquidity and capital in the event of a financial crisis.

The more the central banks were effective at preventing the financial system from collapsing; the more they set things up for bigger crises down the line.

If financial bubbles got big enough, they could overwhelm the capacity of central banks and the treasury departments of states to cope with the situation, in which case a serious debt deflation was conceivable.

Economic power was shifting from corporate boardrooms to financial institutions and markets, affecting the entire capitalist world economy in complex ways, through a process of financial globalization.

The growing role of finance was evident not just in the expansion of financial corporations but also in the growth of the financial subsidiaries and activities of non-financial corporations, so that the distinction between the financial and non-financial corporations, while still significant, became increasingly blurred.

Financialization in the 1980s and ‘90s was the main new force in the much longer-term globalization process, and was the defining element in the whole era of neoliberal economic policy.

Financialization was increasingly interconnected in complex ways with government debt, transforming the role of deficits, particularly in the United States, the center of global financialization.

Given deep-seated stagnation tendencies, there was no alternative for the capitalist economy but continuing financialization.10

The Great Financial Crisis and the Second Contraction

Building on this general model, we first mentioned the bursting of the real estate/housing bubble in Monthly Review as a potential destabilizing force in the U.S economy—in an article that I wrote together with Harry Magdoff and Robert McChesney—in November 2002. This was followed up with an article the following spring entitled “What Recovery?” in which we contended: “The housing bubble may well be stretched about as thin as it can get without bursting.” As the problem became still more critical, I wrote “The Household Debt Bubble” for the May 2006 issue of Monthly Review—pointing to the unsustainable borrowing on home mortgages (with the greatest burdens falling on workers), and the possibility of a bursting of the bubble with economy-wide effects. This was followed by Fred Magdoff’s November 2006 article on the “The Explosion of Debt and Speculation.” So, while some specific aspects of the first onset of the crisis in the late summer of 2007 came as a surprise to us, the general development did not.11

As Carmen Reinhart and Kenneth Rogoff have indicated in This Time Is Different: Eight Centuries of Financial Folly: “Financial crises seldom occur in a vacuum. More often than not, a financial crisis begins only after a real shock slows the pace of the economy; thus it serves as an amplifying mechanism rather than a trigger.” What these same authors call the Second Contraction (the Great Depression was the First Contraction) can thus be interpreted—in the logic of our analysis here—as arising from stagnationary forces leading to the bursting of the financial bubble, which then acted as an amplifying mechanism.12

The Great Financial Crisis itself can be seen as kind of “mean reversion” of financial profits back to the underlying stagnant growth trend in the real economy, resulting in trillions of dollars in losses. This, then, constituted a crisis of financialization—of the main means of countering stagnation in production. In eighteen months, between September 2007 and March 2009, $50 trillion in global assets were erased, including $7 trillion in U.S. stock market wealth and $6 trillion in U.S. housing wealth. By early March 2009, the Dow Jones Industrial Average, adjusted for inflation, had fallen back to its 1966 level—i.e., to the point that it was at when Baran and Sweezy published Monopoly Capital more than four decades earlier.13

Today, in what appears to be a major reversal—a mere year and a few months after the collapse of Lehman Brothers in late 2008, which generated fears of a complete meltdown of the financial system—we are seeing the beginnings of an historically unprecedented “asset price driven recovery.”14 The main strategy of the advanced capitalist states has evolved from an immediate financial bailout, involving tens of trillions of dollars, to a much more concerted attempt, for which there are no real historical analogies, to reinstate financialization as the motor force of the system. This, however, carries obvious dangers. In early November 2009, New York University economist Nouriel Roubini warned that “asset prices have gone through the roof since March in a major and synchronized rally,” feeding what could turn out to be the “mother of all highly leveraged global asset bubbles,” encompassing “a new US asset bubble.” Later that month, Federal Reserve Board Chairman Ben Bernanke cautiously responded to Wall Street concerns that the finance-driven recovery posed the threat of a massive, soon-to-burst, asset bubble, by simply stating (in a kind of non-denial denial): “It’s extraordinarily difficult to tell, but it’s not obvious to me…[that] there are any large misalignments currently in the U.S. financial system.” The Wall Street Journal ran this under the heading: “Bernanke: No Obvious Asset Bubbles in the US Now.”15

Wall Street’s jitters, evident in late 2009, reflect the fact that financial markets have ballooned, with extraordinary rapidity, on top of a real economy in shambles. This has raised fears, not so much of another bubble, but of a bubble that is inflating too fast and too massively, threatening to burst just as quickly and with devastating effect. Andrew Haldane, executive director for financial stability at the Bank of England, speaks ominously of a “doom loop.” He estimates that the support that the United States and Britain have given to their banks in the current crisis amounts to nearly three-quarters of the GDP of these countries. This massive government support to financial institutions, he argues, is encouraging money managers to take on even greater speculative risks, setting the stage for the next crash.16

“Bubble driven economic growth,” as Lawrence Summers, Obama’s leading economic advisor (director of the National Economic Council), observed in March 2009,

is problematic because of disruption and dislocation—affecting those who took part in the bubble’s excesses and those who did not. And, it is not entirely healthy even while it lasts. Between 2000 and 2007—a period of solid aggregate economic growth—the typical working-age household saw their income decline by nearly $2000. The decline in middle-class incomes even as the incomes of the top 1% skyrocketed has a number of causes, but one of them is surely rising asset prices and the fact that financial sector profits exploded to the point where they represented 40% of all corporate profits in 2006.

Summers, in issuing this statement, was well aware that there was no other recourse for monopoly-finance capital, and that the asset price inflation path to economic recovery, based on the financial bailout, carried this very danger. He thus sought to reassure his audience by declaring: “of fundamental importance is ensuring that we do not exchange a painful recession for another unsustainable expansion.” The official position of the Obama administration is that another financial crash can be avoided by putting in place new financial regulations.17 In reality, this fails to acknowledge both the structural relation between stagnation and finance, and the growing economic and political power of finance.

Effective regulation of a financializing economy for any length of time is impossible for reasons that were explained two decades ago by Harry Magdoff: “The more the debt-cum-speculation balloon is inflated, the more threatening does interference by government regulators become, lest the balloon burst. Not only are central bankers and other officials restrained from interfering (except to rescue near-bankrupt large banks and giant corporations), they are impelled to deregulate further in order to ease strains and overcome potential breaking points associated with financial excesses.” On top of this, the growth of international capital markets limits the power of states to regulate them, forcing them to give way to financial market forces.18 Hence, although new regulations may be put in place, they will not, in the end, constitute effective restraints.

The speed with which financialization was reinstated in the U.S. economy over the last year reflected the shift in power referred to above from boardrooms of non-financial corporations to financial institutions and markets, which has increased even in the context of the financial crisis. In 1990 the ten largest financial institutions in the United States accounted for 10 percent of total U.S. financial industry assets. In 2008 this rose to over 60 percent. The same phenomenon is true globally with the ten largest banks in 2009 accounting for 70 percent of global banking assets, compared with 59 percent in 2006. Under these circumstances, the fact that the top economic officials in the Obama administration all have direct ties to Wall Street is scarcely surprising.19

Although the U.S. economy is now exhibiting signs of an economic recovery, it is what leading financial analyst David Rosenberg has called a “Houdini Recovery.” Fully 80 percent of the total rise in profits in the United States in the third quarter of 2009 was accounted for by the financial sector (which represents only a quarter of the economy). Gross-value added in the non-financial corporate sector fell in the third quarter, for the fourth quarter in a row. Consumers are holding back on spending. Investment is still weak. The increased profits in this putative “recovery” are a product of the weak dollar (which increases foreign-derived earnings), stagnant or falling unit labor costs (which reflect the fact that unemployment is at the double digit level), and a decline in non-wage expenses in the form of lower taxes, lower interest payments, etc. (due to state interventions).20

A New Stage of Accumulation?

The question I raised at the beginning of this article is: Has capitalism entered a new stage? In the 2006 article on “Monopoly-Finance Capital” I referred to monopoly-finance capital as a new phase of the monopoly stage of capitalism. If we see the stages of capitalism—say, nineteenth-century competitive capitalism and the twentieth-century monopoly capitalism—as dynamic periods in which economic transformation creates the basis of a whole new means of advance in accumulation, then the period of monopoly-finance capital does not seem to merit such a designation. Rather, the accumulation of capital has remained stagnant in the center of the system, while it has become increasingly dependent on speculative finance to maintain what little growth there is. What we may be witnessing in the present phase is the weakening of capitalist production at the advanced capitalist core as a result of a process of maturation of the accumulation process in these societies: hence, the stagnation-financialization trap. Financialization, however, has, paradoxically, helped to promote wealth and power in this context, creating a complex, contradictory reality in the age of monopoly-finance capital. There can be little doubt that this is an unstable situation, and that capital accumulation at the core of the system is, in many ways, running up against its historic limits.

The most complex issues facing us today, with respect to the economic workings of the system, are the most global ones. How is monopoly-finance capital related to imperialism, globalization, and financialization in the periphery of the world capitalist economy? This includes the question of the significance of the rise of the emerging capitalist economies in Asia, particularly China and India today, but also South East Asia. There is no doubt that stagnation and financialization at the center of the capitalist world economy are structurally related to new openings for export-driven industrialization in the low-wage periphery. At the same time, the whole era of neoliberal financialization has been tied to the third world debt crisis and to attempts to create a new “financial architecture” in underdeveloped economies, leading to new financial dependencies. Even China and India, despite their huge economic advances, have not been able to break out of the imperial systems of foreign exchange and financial control, which leave them often passively responding to initiatives determined primarily within “the triad” of the United States, Europe, and Japan. Emerging economies are now massive dollar creditors, yet the U.S. economy lies outside their control and continues to dictate the terms, reinforcing their reliance on external exports—together with external outlets (and safe havens) for the resulting surplus. Financialization, with its attendant problems, is growing apace in Asia as well. The World Bank, as reported by the Wall Street Journal, has recently raised concerns about asset price bubbles forming in Asia, particularly “in real estate in China, Hong Kong, Singapore and Vietnam.”21

According to Samir Amin, the dominant force in today’s financialized globalization is the imperialist “capitalism of oligopolies,” of which financial oligopolies now constitute the headquarters, backed up by the power of the states of the triad and the so-called international economic organizations that primarily serve their interests (such as the World Bank and the IMF). This system can allow some degree of industrialization in the periphery, but continues to seek to hold onto the reins of power through monopolies in foreign exchange, finance, technology, communications, strategic natural resources, and military power.22

Worsening financial crises and the slowdown in the advanced capitalist economies show how arthritic the overall system has become. The reality is that U.S. hegemony, the geopolitical lynchpin of the empire of monopoly-finance capital, is in crisis. The hegemony of the dollar, around which the whole world economy is organized, first came into question due to the vast export of dollars abroad at the time of the Vietnam War, causing Nixon to end the dollar’s conversion into gold. The dollar now appears to be resuming its secular decline, which could, at some point, usher in a global meltdown.23

Where all of this is leading us historically is, of course, difficult to say since the economic crisis tendencies of capitalism cannot be separated from larger social and environmental transformations operative on a global scale. World-system theorist Immanuel Wallerstein argues that we are currently in a transitionary phase between the contemporary capitalist system and something else.24 In fact, the planetary ecological crisis suggests that capitalist civilization may be generating a terminal crisis for the entire anthropocene era in earth history, which would inevitably spell, not only the demise of capitalism, but—if we do not change course—civilization as a whole.25

In the new speculative era, all that is solid is melting in air. In these difficult and dangerous times, there is no alternative to the development of socialist strategies of sustainable human development—on which all our hopes, at every level, must now rest.

↩ The current “recourse to finance” and the rise of monopoly-finance capital should not be simply confused with what Rudolf Hilferding was referring to in his classic work Finance Capital (1910), in which he defined “finance capital” as “capital controlled by banks and utilized by the industrialists.” Rather, today the issue is one of the speculative employment of money capital in global financial markets as part of a secular financialization. Although this process has enormously increased the power of financial institutions and markets, it is far removed from the much simpler era of the rise of investment banking, which was the focus of Hilferding’s analysis. See Doug Henwood interviewed by Geert Lovink, “Finance and Economics after the Dotcom Crash,” December 20, 2001, http://www.nettime.org. See also Paul M. Sweezy, The Theory of Capitalist Development (New York: Monthly Review Press, 1942), 266.

↩ The theory of accumulation presented in Monopoly Capital was built on the earlier economic works of Michael Kalecki and Josef Steindl. See Michael Kalecki, Theory of Economic Dynamics (New York: Monthly Review Press, 1965); Josef Steindl, Maturity and Stagnation in American Capitalism (New York: Monthly Review Press, 1976).

↩ The concept of “creative destruction” was Schumpeter’s term for the innovation, often involving the destruction of previous capital, that characterized capitalist production. Yet the innovation he celebrated has just as often been a kind of destructive creativity, generating economic waste, as emphasized in Baran and Sweezy’s analysis. See Joseph Schumpeter, Capitalism, Socialism and Democracy (New York: HarperCollins, 1942), 81-86.

↩ On Baran and Sweezy’s thesis on the “outer limits” of civilian government spending as a percent of GDP, and its empirical confirmation from the 1930s to the present, along with the significance of this, see John Bellamy Foster and Robert W. McChesney, “A New New Deal Under Obama,” Monthly Review 60, no. 9 (February 2009): 1-11.

↩ Paul M. Sweezy, “More or Less on Globalization,” Monthly Review 49, no. 4 (September 1997): 3-4. The term “financialization” first made its appearance in Monthly Review in 1995 in a review that addressed Kevin Phillips’s book Arrogant Capital, which had made use of the concept. See Bertram Gross, “The Reserve Armies of the Insecure,” Monthly Review 47, no. 1 (May 1995): 43.

↩ Summers, “Responding to an Historic Economic Crisis.” It is noteworthy, in this context, that Federal Reserve Board Chairman Ben Bernanke has long taken the position that the job of preventing asset bubbles resides primarily with the regulatory function of the federal government and not with the Federal Reserve Board and monetary policy. Reinhart and Rogoff, This Time Is Different, 212-14.

↩ Harry Magdoff, “A New State of Capitalism Ahead?” in Arthur MacEwan and William K. Tabb, Instability and Change in the World Economy (New York: Monthly Review Press, 1989), 350.